Furlough and Layoff Differences

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What is Furlough?

Furlough is defined as any temporary period of time off in which the employees are not paid.  It is usually implemented for a defined period of time, such as a few days or a few weeks.  Many companies institute cyclical furlough schedules, wherein the employees are subject to mandatory time off for one day of the week, for example, every 3rd Wednesday of the month.

Furlough has been implemented by many state and government-run offices as a means of cutting state expenses.  California and Wisconsin are examples of states that have instituted furloughs for workers employed by the state.  In many private employment settings, furlough may be optional and subject to negotiation in the worker’s employment contract. 

What are the Differences between a Furlough and Layoff?

Furlough is not the same as a layoff.  A layoff occurs when the employment is basically terminated from the workforce.  The main difference here is that with a layoff, the employee who was laid off does not have the option of returning to work with the employer.  With furlough, the employee can still return to work even though they had time off without pay.

Additionally, employees who are subject to layoffs are usually cut off from benefits such as medical or dental insurance (although they may be entitled to a severance package).  A common variation of layoffs is a factory “shutdown”.

For example, a paper factory may close down for a period of time if demand for paper production has slowed down.  The company may choose to resume production later on.  However, during the shutdown, employees may effectively be laid off.  They will not be entitled to pay or benefits during the shut down.  If production is to resume, they may have to go through another application process before they begin working.

What kinds of Legal Protections do I have during a Furlough or Layoff?

Employers are generally not required to go into detail when informing an employee that they will be furloughed or laid off.  For example, they may simply state, “We are making cuts due to slow business”, or “Your position in your department places you in the category of employees who will be furloughed”. 

Furlough and lay-off policies are sometimes indicated in the employee’s handbook, which should therefore put the employee on notice of how furloughs will be conducted.

One aspect of furlough laws that has been receiving much attention is that of employment discrimination.  Employers may not furlough or lay off employees if it involves any form of discrimination.  Employers are not allowed to discriminate against certain protected classes of people, such as race, national origin, religion, gender, age, etc.

Thus, if only a certain group of employees are subject to furlough or layoffs, the employee may be held liable for workplace discrimination.  If a discrimination violation is confirmed, the employees may be subject to various remedies, such as being reinstated to their position, being compensated for lost wages, and obtaining damages for other losses.    

Do I need a Lawyer for Legal Issues with a Furlough or Layoff?

Dealing with furloughs and layoffs can sometimes be confusing for employees.  Time off from work without pay can seriously affect one’s financial planning and budgeting.  If you are facing legal issues regarding furlough or layoff periods, you may wish to consult with a lawyer for advice.  Your attorney will be able to review the company policies to determine whether any further action may be necessary.  It is important to contact an attorney if you will be filing an employment complaint with a government agency.

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Last Modified: 03-24-2011 11:52 AM PDT

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